Herbs: Organic Greenhouse Production - Micro-farms

not sell. The strategy of offering pre-ordering to regular customers via e-mail shows promise and has been tried by a Georgia grower. Anyone considering raising herbs and seasoners in a greenhouse should do a cost-benefit analysis. Not everything can be raised anywhere at a reasonable return for the producer. The food and agriculture industry is changing very rapidly. For more help with enterprise planning, please request the ATTRA publication Agricultural Business Planning Templates and Resources. Premium pricing can be critical to the viability of organic greenhouse operations, because production costs are often higher than those for conventional greenhouses. Organic pest control, particularly in labor costs, is generally more expensive than conventional practices. Yield and quality can vary widely, depending on the growing season and management practices. To achieve a satisfactory return on investment, organic growers must be prepared to develop innovative production and marketing strategies. There are tradeoffs in every marketing strategy. A successful grower must develop markets in which the price for organic produce adequately compensates for all production costs. Additionally, the marketing process must be compatible with the grower’s personality and business skills. The particular combination of components in any grower’s marketing strategy will depend on local marketing opportunities, as well as the grower’s desire to be directly involved in marketing, tolerance for stress, and ability to balance a variety of risk factors. For more information, request the ATTRA publications Agricultural Business Planning Templates and Resources, Keys to Success in Value-Added Agriculture, and Direct Marketing. If you are considering building greenhouse facilities for organic production, research the market to assess the economic feasibility. Once you have made the most realistic cost estimates possible, you can develop a plan to adjust your production system, revise your marketing plan, or walk away while you still have your shirt. ATTRA’s greenhouse publication series (see list at right) provides in-depth discussions of fertility, pest control, and other topics from an organic standpoint. Additional resources for greenhouse herb production www.attra.ncat.org are listed at the end of this publication. The New Organic Grower, by Eliot Coleman, has a chapter on “winter gardening” that provides information for USDA hardiness Zones 3 to 6 on technologies helpful in modifying a home-garden system for commercial production.(5) Producing potted herb plants, plugs, and starts is part of the nursery business. See the ATTRA publications Plug and Transplant Production for Organic Systems and Sustainable Small-Scale Nursery Production. Potted plants are typically perennials, often Mediterranean herbs intended for permanent pot culture or for transplants that may serve both practical and ornamental uses in the garden. Dried herbs found in grocery stores do not come from greenhouse production, but are field raised and sometimes wildcrafted outside the U.S. It is not economical to use controlled atmosphere space to produce dried herbs. The transcript of a presentation by Alan De Young, who represents the largest industrial herb producer and processor in the U.S., at the Fifth (and final) Richters Commercial Herb Growing Conference, Ontario, Canada, may be found in the proceedings of that meeting. It is the best account, by far, of contemporary Good Agricultural Practices (GAP) and Good Manufacturing Practices (GMP)—including certified organic—for herb products.(6) Propagation Material Herbs intended for fresh-cut sales are started either from seed or by a speciesappropriate vegetative method—often as plugs—then grown out in bags of growing medium or in a hydroponic system. For information on the propagation method for a specific herb, see Table 1. For more information on organic plug production, see the ATTRA publications Plug and Transplant Production for Organic Systems and Potting Mixes for Certified Organic Production. ATTRA Greenhouse Publications Greenhouse and Hydroponic Vegetable Production Resources on the Internet Greenhouse IPM: Sustainable Aphid Control Greenhouse IPM: Sustainable Thrips Control Greenhouse IPM: Sustainable Whitefly Control Integrated Pest Management for Greenhouse Crops Solar Greenhouses Resource List Organic Greenhouse Vegetable Production Plug and Transplant Production for Organic Systems Potting Mixes for Certified Organic Production Root Zone Heating for Greenhouse Crops Compost-heated Greenhouses Foliar Fertilization Organically grown seed of all types is currently in short supply. To produce organic seeds, an operation must be certified by a USDA-accredited certifier (see current list at www.ams.usda.gov/nop). ATTRA Page 3

Page 4 ATTRA Herbs: Organic Greenhouse Production Lemon, French, English, silver, creeping, winter. M Mediterranean herb; A Annual; P Perennial Thyme (M)(P) Cuttings Cuttings Tarragon (P) French Cuttings Scented geraniums (A) Lemon, peppermint, rose Seed or cuttings Dalmation is best for freshcut herbs. Sage (M)(P) Seed Cuttings of a good-flavored variety Flat leaf, cv. Italian Dark Green Cuttings Seed Rosemary (M)(P) Parsley (A) Oregano (M)(P) Parsley (A) Cuttings Mint (P) Peppermint, spearmint, pineapple mint Greek Curly Seed Seed Cuttings Cuttings Recommended Propagation Method Genovese, Italian Large Leaf, Seed Thai, Mammoth Spicy Globe Seed Dark Opal, Purple Ruffles Seed Grolau Seed Type or cultivar Cilantro (A) Santo, Jantar Dill (A) Fernleaf Lavender (M)(P) Munstead, Grosso Sweet marjoram (M)(P) Dwarf basil (A) Purple basil (A) Chives (P) Sweet basil (A) Table 1. Popular Herbs Herb The most popular herb. Be careful not to start too early. Remove flowers as they appear for greater leaf production. See above. See above. Be careful not to start too early. Rose-pink flowers borne in spring/summer. Chefs prefer fine-leaved types, but thick-leaved types hold up better in packages. Easier to harvest if planted in clusters. Ready for sale at 6–8 inches high. ‘Dukat’ is extra bushy. Seed does not come true to type. Best to use cuttings of true Origanum majorana. USDA has released hybrid Origanum x majoricum hardy to Zone 6 May be erect or trailing. Many foliage variations. Can be invasive. Variegated good as ornamentals. Those with white flowers are preferred. Can be used in containers. Makes a good edging plant. Technically a biennial, it’s grown as an annual. Best for culinary use. Because of its fine flavor, prices are usually higher than for curly type. Erect and trailing forms available. Erect forms are best for culinary use. ‘Arp,’ while winter-hardy, is not recommended for culinary use. Common sage is usually grown from seed; those with colored foliage are usually grown from cuttings. Erect and speading forms. Suitable for containers. Try ‘Purpurescens,’ ‘Tri-color,’ or ‘Aurea’ for potted ornamentals. Flowers of scented geraniums are smaller and less showy than those of bedding geraniums. Requires dormancy. Unusual growth pattern. “Russian” tarragon is of no commercial value. Cuttings ensure true-to-type. Best flowering is on older plants. Slow to grow back after cutting. Comments

If organic seed is not available, conventionally produced non-GMO untreated seed may be used for an organic annual herb crop, according to §205.204(a)(1) of the National Organic Program rules. Perennials must be raised for at least a year under organic management in order to be considered organic. See text of the Final Rule on sources of propagation material for organic production, below. For a list of companies selling certified organic and untreated seed, see the new ATTRA Web-only database Suppliers of Seed for Certified Organic Production. An Internet search on specific herbs is also advisable. NOP Rule §205.204 Seeds and planting stock practice standard (a) The producer must use organically grown seeds, annual seedlings, and planting stock: Except, That, (1) Nonorganically produced, untreated seeds and planting stock may be used to produce an organic crop when an equivalent organically produced variety is not commercially available, Except, That, organically produced seed must be used for the production of edible sprouts; (2) Nonorganically produced seeds and planting stock that have been treated with a substance included on the National List of synthetic substances allowed for use in organic crop production may be used to produce an organic crop when an equivalent organically produced or untreated variety is not commercially available; (3) Nonorganically produced annual seedlings may be used to produce an organic crop when a temporary variance has been granted in accordance with §205.290(a)(2); (4) Nonorganically produced planting stock to be used to produce a perennial crop may be sold, labeled, or represented as organically produced only after the planting stock has been maintained under a system of organic management for a period of no less than 1 year; and (5) Seeds, annual seedlings, and planting stock treated with prohibited substances may be used to produce an organic crop when the application of the materials is a requirement of Federal or State phytosanitary regulations. National Organic Program Final Rule, www.ams.usda.gov/nop www.attra.ncat.org For vegetatively propagated perennial herbs, greenhouse herb producers often take cuttings from their own “mother plants.” This practice gives producers already certified a decided advantage over start-up businesses, since they can procure organic starts at any time without any waiting period. Economies of scale have caused rapid consolidation in organic herb production. Growers seeking first-time organic certification or switching to a new certifier, as well as individuals planning to construct greenhouses for organic production, do well to secure their perennial herbs early in the mandatory three-year transitional period. After certification of a greenhouse operation, any new perennial plant stock must come from a certified organic source or be raised for at least one year under an approved organic management system before products derived from those plants can legally be sold as organic. This applies to foundation stock for potted plant production, as well as perennials for fresh-cut herb production. Section 205.204 is subject to interpretation by the accredited certifier for a given operation. Marketing and Economics Industry overview New producers interested in the organic greenhouse herb business should take the following into consideration. The organic premium in wholesale markets seems to be running about 33%. However, the market is segmented to such a degree that direct-marketed fresh-cuts can bring an organic premium of 400% or more. USDA Agricultural Marketing Service (USDA/AMS) reports weekly wholesale prices for conventionally grown culinary herbs at 18 U.S. terminal produce markets. (See www.ams.usda.gov. The Web site has in spring 2005 become more user friendly.) The Web-based e-zine New Farm now reports weekly prices for organic herbs and, through its network of volunteer reporters, plans to report information on farmers’ market prices for organic herbs. On March ATTRA Page 5

1, 2005, the only organic product reported through wholesale terminal market reports was basil, with conventionally grown basil selling for 9.60 (per dozen bunches), compared to 13.25 for organic basil (per dozen bunches) at the Seattle, Washington, terminal. (The New Farm site does not archive organic prices for comparison.) The National Agricultural Statistics Service reported that, as of 2002, certified organic accounted for 30% of all U.S.-grown fresh culinary herbs in regular commercial channels. The Organic Price Index published on-line by New Farm (www.newfarm.com), compares organic and conventional fresh culinary herb prices, using USDA organic Potted herbs for sale at the USDA Farmers’ Market in Washington, D.C. Photo by Bill Tarpenning, USDA. data “gathered by AMS [USDA/Agricultural Marketing Service] employees” but reported separately from the National Wholesale Herb Report. Price comparisons over time (for conventional basil only) reveal that in November 1999, at the Philadelphia terminal, 15 bunches wholesaled for 13.00, and at the same terminal on June 3, 2002, for 10.00, or 11.00 to 13.00 airfreighted from Israel. On March 1, 2005, at the Philadelphia terminal, comparable amounts were 12.00 airfreighted from Israel and 12.00 from Florida. This demonstrates level or decreasing wholesale prices for Page 6 ATTRA fresh-cut herbs since 1999, despite slow increases for most food prices, due to inflation. According to a West Coast organic wholesale produce vendor, the organic herbs coming through the Seattle Produce Terminal are from two sources: Herbco, a 45-acre certified organic farm in Washington state, and Jacobs Farm, a 300-acre certified organic farm in Pescadero, California. Jacobs Farm also sells for the 250-member Del Cabo Cooperative growing certified organic basil year-round in Mexico (Baja Sur). Prices for the same herb the same week can vary among terminal markets. An unexplained anomaly is that an herb from Israel can sell for more than twice as much at an East Coast terminal than at a California terminal. West Coast terminal prices, under pressure from Mexican and Central American supplies, have decreased dramatically since 1999. On March 1, 2005, at Boston and Philadelphia, the only organic herbs available were cilantro and parsley. At the San Francisco terminal, organic herbs available did not include basil but did include marjoram, oregano, tarragon, and chives. In Seattle, besides basil, herbs included lemon thyme, marjoram, oregano, peppermint, rosemary, sage, tarragon, chives, sorrel, spearmint, and thyme. USDA/ERS has just begun publishing organic prices (and corresponding conventional prices) for some produce from the Boston and San Francisco wholesale markets. Herbs could be added in the future. (See www.ers.usda.gov/data/organicprices.) Grocery distributors depend heavily on wholesale sources for herbs. Food manufacturers rely on intermediate products such as essential oils, herb pastes and essences, and herb blends to season consumer products. Upscale urban restaurants meet their needs for the Mediterranean herbs (thyme, marjoram, summer savory, French tarragon, Greek oregano) from terminal markets, though they sometimes find the quality of local organic herbs very attractive. The Herbs: Organic Greenhouse Production

prepping of herbs used as a food ingredient in meals served by restaurant chains and large institutions typically occurs far from the premises. Most public schools do not do food prep and cooking on site anymore. Due to concerted efforts by farmer groups in some states, some school systems have been re-educated about the advantages of buying produce from local sources. Farmer groups then must set up food preparation centers and deliver produce according to specification (washed, pre-cut, bagged, etc.). The two top U.S. fresh-cut herbs yearround—parsley and cilantro—come from large, high-tech greenhouses in California, Mexico, and the Caribbean. Countries airfreighting fresh herbs and related specialty crops to the U.S. now include Mexico (lately Baja Sur), Peru, Costa Rica, Colombia, The Philippines, Canada, and France, as well as Israel, where dry desert air and mineralladen water provide a competitive advantage for Mediterranean herbs. Peru has the advantage of a complementary season. California, Florida, and Hawaii lead among U.S.-based suppliers—although an undetermined share of California production may be repackaged herbs from Mexico and Central America. The New Jersey Department of Agriculture, in cooperation with Rutgers University, devoted significant time and money in the mid-1990s to development of a greenhouse herb industry, and for a time New Jersey greenhouse growers wholesaled horseradish, mint, cilantro, and basil to East Coast terminal markets. Now year-round herb farms have turned to direct marketing (see www.plochfarms.com), and Rutgers (the state university of New Jersey) has turned its attention to the economics and production of greenhouse flowers. See http://aesop. rutgers.edu/ farmmgmt/green-house/greenhouse-index.html. The New Jersey Fresh program lists (by county) twenty farms with greenhouses offering herbs through roadside markets and one pick-your-own herb farm with a greenhouse. None are certified organic. See www.state.nj.us/jerseyfresh/ index.html. www.attra.ncat.org It is estimated that a city the size of Kansas City, Missouri, would need only one three-greenhouse operation to supply all of its culinary herb needs year-round—if the metropolitan area depended totally on local production. As in other aspects of herb raising, when the wholesale market expands, existing growers get bigger; improvements in transportation have facilitated imports of fragile crops from distant locations. However, volatility in oil prices is an unknown factor in projecting future markets for locally produced greenhouse herb crops. New Farm is building a network that can report direct-marketed weekly organic produce sales (including fresh herbs). For updates, go to www.newfarm.com and follow the dashboard links. New Farm estimates that alternative marketing methods account for at least 50% of sales of organic fresh herbs. For an overview of direct marketing methods, see the ATTRA publication Direct Marketing. Key success factors Industry research (as reported in the media, including cookbooks that influence consumer awareness) will continue to dictate the market environment and determine the popularity and sales volume of individual herbs. Grower development of marketing and research must be pursued diligently in order to identify changing environments and emerging opportunities. Growers must be able to produce and handle multiple products, preferably from a variety of crops, in order to reduce dependence on market fluctuations for any single crop. Developing a sales network of multiple buyers will reduce dependence on any single purchaser and increase the producer’s relative bargaining power. Due to labor-intensive practices of small operators—who cannot afford the high-tech, computerized greenhouses characteristic of foreign competitors in greenhouse production— growers must be able to secure a consistent labor supply at relatively low cost. Adapted from Watts and Associates. 2002. Market Opportunities and Strategic Directions for Specialty Herbs and Essential Oil Crops in Montana. Prepared for: Montana Department of Agriculture, Billings, MT; USDA Federal-State Marketing Improvement Program, Washington, D.C. p. 42. www.ams.usda.gov/TMD/FSMIP/FY2000/MT0294.pdf ATTRA Page 7

Local producers Wholesaling organic fresh-cut herbs Herbs for sale at the Crescent City Farmers’ Market in New Orleans, Louisiana. Photo by Bill Tarpenning, USDA. It is now customary for supermarkets to charge produce vendors “slotting fees” for shelf space. In addition, vendors may be asked for advertising and promotion allowances that can add up to thousands of dollars. There has been tremendous consolidation in the retail food sector in recent years, emphasizing economies of scale. Few independent grocers exist who can make their own decisions on stocking local produce; chains stock their retail stores from regional warehouses, where volume and price rule the terms for vendors. At a USDA conference in Little Rock, Arkansas, in 2001, the produce buyer for a major national chain— which advertises its “buy local” program— acknowledged that his stores buy local produce only when a sudden, temporary shortage of the item occurs. Natural and health food stores, which buy more organic produce, are under essentially the same constraints, since they must commit to a wholesale supplier to ensure year-round supplies. Moreover, even when a local store commits, as matter of policy, to reserve slots for local organic herbs, no one can guarantee sales volume in advance of planting. The risk inevitably is borne by the grower. Desmond Jolly, who directs the University of California-Davis Small Farm Program, urges small growers to investigate alternative business models in keeping with the rapidly changing U.S. economy. Forming a marketing cooperative (7) is one way for small growers to generate the economies of scale necessary to bargain with supermarket chains or institutional buyers.(8) USDA’s Rural Business–Cooperative Service can provide publications and guidance on forming a producers’ cooperative. Request these RBS publications from ATTRA. Page 8 ATTRA Some enterprising growers integrate greenhouse production with retail sales, services, entertainment, and community participation. For more information on rural tourism and farm profiles, see the ATTRA publications Entertainment Farming and Agri-tourism and Lavender Production, Products, Markets, and Entertainment Farming. Also see herb farms participating in the Jersey Fresh Program at www.state.nj.us/jerseyfresh/ index.html. New product directions Ethnic cuisines, with their own particular herb preferences, are becoming extremely popular. With an increasing Hispanic population, U.S. vendors now supply culinary herbs that only a few years ago were considered exotic. Sales figures for epazote recently appeared for the first time on the National Wholesale Herb Report. As demand for Thai herbs and seasoners levels off, demand for Vietnamese herbs picks up. Less common herbs include chervil, curry leaf, salad burnet, sorrel, ajmud, West Indian culantro, Mexican mint marigold, hojo santo, garlic chives, lemon balm, shungiku (garland chrysanthemum), Mexican oregano (Lippia graveolins), bergamot, rue, and summer savory.

a greenhouse herb industry in the U.S.(1) Commercial-scale green-house production is sim-ply not economically fea-sible for fresh-cut herbs, when the entire U.S. market can be supplied from outdoor operations in favorable climates and from foreign greenhouse producers. Two large organic herb farms now supply the Seattle pro-